FTX cryptocurrency exchange files for bankruptcy as federal agencies investigate: NPR

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An ad for the Bitcoin cryptocurrency appears on a street in February. 17 in Hong Kong. Bitcoin fell to a two-year low on Wednesday.

Kin Cheung/AP


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Kin Cheung/AP


An ad for the Bitcoin cryptocurrency appears on a street in February. 17 in Hong Kong. Bitcoin fell to a two-year low on Wednesday.

Kin Cheung/AP

Embattled cryptocurrency exchange FTX, short billion dollars, is seeking bankruptcy protection after its collapse this week.

FTX and its CEO and founder Sam Bankman-Fried are under investigation by the Department of Justice and the Securities and Exchange Commission to determine whether any criminal activity or securities violations have been committed. The person could not discuss details of the investigations publicly and spoke to The Associated Press on condition of anonymity.

The investigation centers on the possibility that the firm may have used customer deposits to fund bets at Bankman-Fried’s hedge fund, Alameda Research. In traditional markets, brokers are expected to segregate client funds from other corporate assets. Violations may be punished by the supervisory authorities.

FTX had earlier this week agreed to sell itself to larger rival Binance after experiencing the cryptocurrency equivalent of a bank run. Customers fled the exchange after becoming concerned about whether FTX had sufficient capital.

The crypto world had hoped that Binance, the world’s largest crypto exchange, might be able to save FTX and its depositors. But after Binance had a chance to look at FTX’s books, it became clear that the smaller exchange’s problems were too big to handle.

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